Grupo Televisa, S.A.B. (TV) Earnings

Management highlights

### Three-Year Telecom Turnaround Accomplishments - Subscriber base quality and stability: Five consecutive quarters of sequential internet subscriber growth, with churn maintained below 2% (the lowest churn in 10 quarters in Q2 2026), validating the value-focused customer strategy. - Revenue growth inflection: First half 2026 residential and enterprise revenue reached 23.7 billion pesos, up 2.6% year-on-year, ending a multi-quarter period of cable revenue pressure. - OPEX efficiency and synergy realization: Annual OPEX has been reduced by 18.4% to 34.5 billion pesos from 42.2 billion pesos three years prior, despite 14.7% cumulative inflation. Headcount was cut from ~34,000 to ~25,000, cutting labor costs by almost 8% despite 50%+ cumulative minimum wage increases, and programming costs were cut by ~20%. Consolidated operating margin expanded 260 basis points to 40.7% over three years. Corporate expenses fell 65% to ~400 million pesos annually, driven by functional integration between cable and content operations. - FTTH network upgrade progress: 18 months after launching a full network upgrade to fiber-to-the-home, 12 million of 20 million total passed homes are now connected via FTTH (60% of the total footprint), on track to complete 100% coverage by Q2 2027. - Disciplined CAPEX and strong free cash flow: Average annual CAPEX is 36.5% lower than the two years before the turnaround, at 11.3 billion pesos, with a CAPEX-to-sales ratio of 18.5% down from 25.8%. Excluding the FTTH upgrade, organic CAPEX is almost 50% lower at 9.1 billion annually, with a 14.9% CAPEX-to-sales ratio. Accumulated free cash flow over three years totaled 16.4 billion pesos (~$300 million annually, or ~$375 million annually excluding FTTH upgrade costs), reducing leverage from 2.4x EBITDA to 1.6x EBITDA. ### Q2 2026 Operational Updates - Subscriber results: Broadband net adds were 9,400 (impacted by an April price increase, competitor promotions, and an early rainy season), with 80,000 net adds over the last four quarters meeting internal annual targets. Video lost 31,000 subscribers, an improvement from the 38,000 average quarterly loss over the last year. Mobile net adds were a solid 72,000, slightly slowed by a new mandatory national ID registration requirement for mobile users. Sky lost 279,000 revenue generating units (mostly lapsed prepaid subscribers), an improvement from the 326,000 average quarterly loss over the last year, partially boosted by World Cup transmission. ### Televisa Univision Q2 2026 Highlights - VIX streaming delivered record quarterly subscriber additions and subscription revenue, driven by exclusive World Cup streaming rights, with the company focused on continued subscription growth and DTC profitability. World Cup coverage reached an unprecedented 415 million total viewers across 79 matches, nearly doubling the reach of the closest competitor in Mexico.

Guidance

- FTTH network upgrade remains on track to complete 100% coverage of Grupo Televisa's 20 million home footprint by the end of Q2 2027, with 8 million additional homes to be upgraded over the next 12 months. - Management expects the current 2.6% year-on-year revenue growth pace for cable residential and enterprise operations to be sustainable. - Televisa Univision reaffirms full-year 2026 CAPEX will remain consistent with 2025 full-year levels, despite higher Q2 CAPEX tied to World Cup-related investments. - Televisa Univision expects U.S. advertising trends in Q3 2026 to remain broadly consistent with Q2 2026, held back by macroeconomic conditions and a competitive sports programming slate. Continued World Cup momentum in Mexico/Latin America and fourth quarter U.S. political advertising are expected to partially offset U.S. advertising weakness in the second half of 2026. - Management expects ongoing operational efficiency and synergy gains to continue expanding margins going forward, enabled by new technology including AI.

Segment performance

1. **Telecom (Cable & Sky)**: Total segment revenue was 14.3 billion pesos, a 3% year-on-year decline. Operating segment income reached 6 billion pesos, up 5% year-on-year, with an operating margin of 41.8% (expanded 310 basis points year-on-year, the highest in three years). Residential operations net revenue was 10.7 billion pesos, up 1.8% year-on-year (the strongest growth in 2.5 years). Enterprise operations net revenue was 1 billion pesos, up 0.8% year-on-year. Sky revenue was 2.5 billion pesos, down 20.3% year-on-year (the pace of decline slowed from 24.6% in Q1 2026). Second quarter CAPEX was 3.6 billion pesos, equal to 25.3% of sales, driven primarily by FTTH network upgrades. Operating cash flow was 2.4 billion pesos, 16.6% of sales. 2. **Televisa Univision**: Total revenue was $1.3 billion, up 10% year-on-year. Mexico revenue surged 53% year-on-year to $605 million, driven by FIFA World Cup viewership and monetization. U.S. advertising revenue was 29% lower year-on-year due to the absence of World Cup rights and cyclical softness in linear media, while Mexico advertising revenue grew 23% year-on-year. Consolidated subscription and licensing revenue rose 40% year-on-year, including $90 million in World Cup sub-licensing revenue in Latin America, with 8% growth in the U.S. and 157% growth in Mexico. Q2 2026 CAPEX was $36 million. Net debt to EBITDA was 5.5x, improved from 5.7x in the prior quarter.

Risks & headwinds

- Q2 2026 broadband net adds were softer than expected, driven by recent price increases, more aggressive competitor promotions targeting low-ARPU customers, and an earlier than expected rainy season. - A new Mexican national mandatory ID registration requirement for mobile users has caused a temporary broad slowdown in mobile net adds across the market. - Sky continues to face subscriber declines as customers migrate to fiber broadband and OTT services; while the pace of decline slowed in Q2 2026, pressure remains. - Increased competitor focus on low-ARPU entry-level customers has created modest downward pressure on Grupo Televisa's subscriber acquisition, though management has deliberately avoided this segment to preserve low churn and strong returns. - Starlink's rapidly growing satellite capacity could pose a longer-term competitive threat to fixed broadband in the Mexican mass market, though management does not see it as a short-term threat. - U.S. linear advertising market remains soft, with continued cyclical pressure expected through at least Q3 2026.

Analyst Q&A

• Q: Asked about Grupo Televisa's strategy for telecom market consolidation in Mexico: whether the company will pursue consolidation alone or with a partner, what ownership stake it will target for acquisitions, and what leverage level it would be comfortable with post-acquisition. /

  A: Management notes it has long supported industry consolidation as a necessary improvement for the fragmented Mexican market, and will evaluate all potential strategic opportunities on a case-by-case basis. Any decision to bring on a strategic partner or pursue 100% ownership versus a minority controlling stake depends entirely on the specific opportunity. Management adds that the company's current leverage of ~1.6x EBITDA leaves a strong, flexible balance sheet to pursue any attractive opportunities that create shareholder value, with the acceptable leverage level dependent on the target's cash flow profile.

• Q: Asked how much additional synergy can still be extracted from the Cable and Sky integration, after large headcount cuts to date, and for more detail on competitive dynamics in broadband. /

  A: Management notes that while the bulk of integration-related headcount synergies are complete, new technologies, particularly AI, continue to create ongoing opportunities for operational efficiency across all business functions, and expects further margin improvement going forward. Regarding competition, management explains that many competitors are aggressively pursuing low-ARPU, price-sensitive customers, a segment Grupo Televisa has deliberately chosen to avoid, as these customers have higher churn and lower investment returns, aligning with the company's strategy of focusing on higher-value, longer-term customers.

• Q: Asked about the competitive benefits of FTTH upgrades, including whether fiber enables higher ARPUs or lower churn in upgraded regions. /

  A: Management explains that all new subscriber adds are on fiber, and existing subscribers are migrated to fiber when they request upgraded services. The company has observed that fiber allows it to sell higher-tier, higher-priced products, and the full fiber upgrade is a long-term strategic end game to remain competitive, rather than a short-term pricing play. Most subscribers do not distinguish between fiber and legacy network technology, so the upgrade is largely behind-the-scenes infrastructure improvement.

• Q: Asked what impact Starlink has on Grupo Televisa's business, and whether the company views Starlink as a competitor or partner. /

  A: Management acknowledges Starlink's rapidly expanding capacity and notes it would be a mistake to underestimate the company long-term, but does not see Starlink as a short-term threat to the mass market given its current pricing. Grupo Televisa has an active partnership with Starlink for both B2B and B2C applications: Starlink is used as a complementary/backup service for corporate clients, and is offered as a solution for residential areas where Grupo Televisa has not yet deployed fiber, paired with the company's content offerings, creating a mutually profitable relationship.

• Q: Asked what long-term operational benefits AI can deliver, and whether management is concerned about rising AI token costs. /

  A: For Televisa Univision, AI is already delivering major efficiency gains on the content production side, including set design, special effects, and AI-powered dubbing that allows the company to efficiently localize telenovelas for new international markets, unlocking new revenue streams. For telecom operations, AI is already embedded end-to-end across sales and collections processes. To avoid volatile token costs and prevent data leakage, Grupo Televisa has deployed its own internal AI infrastructure with on-premises GPUs and storage, allowing for precise cost management.